City discusses rising cost of electricity

GALLIPOLIS — Those residents in the city of Gallipolis who are on the electric aggregation program are probably now well aware that the city’s current aggregation contract will end in August, and, according to Gallipolis City Manager Randy Finney, the new rates may go up significantly.

Finney reported on the electric aggregation program during a special meeting of the Gallipolis City Commission last Thursday, and, following a lengthy discussion, the commission granted Finney the authorization to negotiate rates and sign a contract with the most competitive retail electric supplier.

“Our plan that we are currently on for aggregation runs out in August, along with all the municipal electric rates. Residents have received a letter stating that fact that it will go out in August,” Finney told the commission. “I started negotiating on the rates before the water crisis happened and I got back to it this week. That’s why I need the meeting tonight to pass this ordinance so you can give me authorization to go out and negotiate the rates.”

Finney reported that, due to the very constrained time frames surrounding electric aggregation rates, he will have to himself provide the city’s decision concerning the program to the prospective electric supplier within a 24- to 48-hour period, thus the need for the passage of the ordinance and the authorization to do so.

“The way it works is that you have to go out and get a rate for commercial and residential, you actually have to give them an answer within a day or two if you want that rate or not. They are so volatile right now with the rates that it’s unpredictable,” Finney stated.

The city manager further reported that the current bids on electric rates he has received range from a little less than 7 cents per kilowatt hour to more than 9 cents — a rate that is much more than the city’s current rate of slightly more than 5 cents per kilowatt hour.

“The rates we are getting from Volunteer Energy through Dayton Power and Light are anywhere from 7 cents for commercial and and up to 9 cents for residential, which is unacceptable.” Finney stated. “I have found a rate that’s a little under 7 cents right now for municipal operations, but I need to get the authorization to go ahead.”

Finney reported that he will send the program out to bid, as is required by law, to the approximately 10 to 12 companies that provide electric aggregation program and will ask for quick responses from all the various electric providers.

“I’m going to try to get it wrapped up by, at least, the second week in July so the residents will have the chance to make a decision on what they want to do,” he said. “We’ll get the rates to them and what they are going to be. If they want to go out and shop their own rates to find a better rate, that’s going to be up to them to do that. But, at this point, everybody will still roll into the aggregation within the city.”

The increase in electric rates can be directly attributed to the impact of new Environmental Protection Agency regulations on coal fired power plants — many of which are being forced to shut down.

“Right now, I understand, because of the coal fired plants being shut down across the area, it’s going to impact our rates significantly, so I am going to try to lock into a three-year plan so we don’t have to try to fight this every year and resolve all this issues with that,” Finney said. “They are going to be losing power. They aren’t going to be generating power out of those plants so it’s going to make everything else go up.”

Finney further reported that he would like the city to stay with their current provider as the current electric aggregation plan has been a good program for the community and the municipality, but, in the light of the increase in electric rates, he would have to find the most competitive pricing available.

“The first year we did it, when we had Scioto Energy, we saved probably close to $50,000 to $70,000 a year on energy savings with what we did with them, and we were paying 6.5 cents there,” Finney said. “When we went to DP&L [Dayton Power and Light] we went down to paying 5.3 cents. It’s going to be at least 7 if not 7.5 [now]. It’s going to go up there’s no way around it right now.”

Commission President Steve Wallis expressed his concern over the bidding process and whether or not other community-based factors should be figured into the decision.

“I think we need to take in the collateral ramifications of the choices,” Wallis said. “I don’t want the community to lose its funding sources. I think it is something we should calculate into the figure.”

Finney reported that due to the procedures surrounding the bidding process, the city’s hands were tied and they must go with what company provides the most competitive bid in this situation as with any other bidding process.

“We have that with anything we do,” Finney told Wallis. “It’s just what we’re tied into being a municipal government. We don’t have the liberty to make that choice. We’re a government, we take the best price unless you have a legitimate reason why.”

Wallis further stated that he understood the time constraints surrounding this particular bidding process, but he would wish the commission would have further input into what company the city will be contracting with for their aggregation program.

“I don’t want folks to think we are skirting our responsibility to make a decision, but I understand that they are not giving us enough time to have back to back meetings,” Wallis said.

Finney stated that due to the volatility of the electric rates right now the city really has no other option but to move forward quickly to lock in the best rate possible.

“I’m not trying to keep you out of the loop or anything, but this is the problem I am faced with is that when they say, ‘if you don’t give us a decision within 24 hours, the price changes,’” Finney said. “It’s so violate. It might work to our benefit. It might not. I don’t know.”

The next scheduled regular city commission meeting will be held beginning at 6 p.m. on Tuesday, July 1 at the Gallipolis Municipal Building, 333 Third Ave., Gallipolis.

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